Jibson Glows With Optimism Over Natural Gas Prospects

The facts and figures bear out that natural gas is THE product of the decade and with the Shale Gas Revolution barely underway, it’s just getting started. For the industry in the United States, which is leading the development, production and transportation of this valuable and environmentally friendly fuel, there has never been a more exciting time to be in the business.

That excitement is also tempered with the many challenges facing the natural gas industry, and it is up to those providers and transporters to find the appropriate responses. With so much at stake, they can ill afford a misstep. Those responsibilities ultimately fall upon the shoulders of the associations that represent the various sectors of the industry’s interests in the nation’s capital and elsewhere. For the local gas distribution companies, that voice is the venerable American Gas Association.

The leading voice this year for the AGA’s efforts is Chairman Ronald W. Jibson, chairman, president and CEO of Questar Corporation, an integrated energy company based in Salt Lake City, UT. He has been president and CEO of Questar since July 2010 and was named chairman last summer. Prior to that, he was an executive vice president of the corporation and president of its utility subsidiary, Questar Gas Company, which serves about 1 million customers in Utah, southern Idaho and southwestern Wyoming.

Jibson has held several Questar executive and management positions since starting with the company 32 years ago as a design engineer. He graduated from Utah State University with a bachelor’s degree in Civil Engineering and later received a master’s of Business Administration degree from Westminster College. He is a Licensed Professional Engineer in the state of Utah.

In this interview, Jibson acknowledges that while natural gas may not have been his first choice, ultimately he made the right decision and couldn’t be happier.

P&GJ: How did you decide on a career in the energy industry, and what was the career path that has brought you to your current position with Questar?

Jibson: Growing up, I spent a lot of time helping my father, who was a hydrologist. I never wanted to be an engineer, but designing things was in my blood. I changed my major about five times before settling on engineering. I was working for the state of Utah’s engineer’s office, when I got a call from a Questar recruiter. I thought I’d be with the utility five years. In 32 years, I’ve never wanted to leave. I had some great mentors over the past several years who offered me opportunities to work in several areas, but I never expected I’d be chairman and CEO of Questar.

P&GJ: What are your priorities as AGA chairman and your views on matters such as NGVs and LNG exports?

Jibson: One priority is providing education and leadership to support the growing realization that natural gas is not a bridge fuel to something better. It is this nation’s foundation fuel for the foreseeable future. Every American should have access to the advantages of gas for everything from transportation to fuel cells and micro-grids. At AGA, we’re also laying the groundwork for a technological leap in the safety and cybersecurity of our delivery systems.

Greater use of natural gas for transportation must be part of any clean-air and energy-security discussions. And LNG exports, now viable because of expanding supply, may actually help stabilize commodity prices, so that gas remains affordable for customers and a good investment for energy producers.

P&GJ: How has AGA grown during the past year and what changes has AGA made to better represent its members?

Jibson: AGA is already the premier trade organization for natural gas utilities. At this point, growth is more a function of increasing cooperation and influence. Our members actually establish the priorities we focus on. Although the industry has always been focused on safety, the bar has been raised significantly in recent years, and, in the past year, we have been focused on getting where we need to be in relationship to cybersecurity.

P&GJ: In your discussions with gas utility officials, what do they feel are their biggest concerns and challenges?

Jibson: In addition to a continued focus on safety and security, two common concerns shared by most utility management teams seem to be succession planning for aging workforces and the potential for unpredictable regulations. Planning becomes more difficult when national policy discussions on taxes, the environment and energy policy may result in unforeseen impacts on our businesses.

P&GJ: How are the gas utilities progressing in terms of DIMP, including inspecting unpiggable pipelines?

Jibson: Utilities have been focused on integrity management long before formalized regulations came into effect. Through the formalized process, most utilities are getting a better understanding of their systems, updating their mapping systems, collecting more data, identifying threats and calculating risks to their systems. Unpiggable lines remain a major challenge, but utilities are supporting the research and development that is just bringing new technologies to market to assist in assessing unpiggable lines.

P&GJ: What are companies and AGA doing to ensure the safety of their pipelines?

Jibson: Safety is our industry’s top priority, and although we have a great safety record, we’re not sitting still. Ramped-up integrity-management programs and research are enabling us to identify potential problems in our systems with more reliability and confidence. We’re also preparing and educating ourselves about potential vulnerabilities related to cybersecurity. We’re working with the federal government and have an action plan.

P&GJ: Are more companies upgrading their replacement programs to replace aging pipe? What is your own company doing in this way?

Jibson: Most companies have now embarked on such programs. Questar Gas has been a little ahead of the curve on this. We replaced cast iron and bare steel long ago. In 2007, we started an ambitious multi-year program to replace aging high-pressure feeder lines. During 2012, we invested $58.4 million in this program, and expect to continue annual investments of $55-60 million for the next several years.

P&GJ: Is replacing an aging workforce a problem throughout the industry, and how are companies coping with it? Jibson: Utilities, with their reputation for stable employment, are not having problems replacing retiring employees. However, replacing experience is tougher. Many companies, ours included, are now engaged in knowledge-transfer programs. They are working feverishly to document the tasks involved in every job, and using more-experienced workers to train younger employees.

P&GJ: Are utilities also adding jobs, and if so, in what fields? Jibson: Technology is constantly making us more efficient – almost all utilities with growing customer bases are able to serve them with fewer employees. That said, there are new opportunities in integrity-management, safety and conservation programs.

P&GJ: What effect is the low-price environment having on utilities? Jibson: The lower the price, the happier the customers. Happier customers make life easier for utilities. So the current low cost of natural gas is good for all utilities. These costs are typically passed along dollar-for-dollar to customers. Even those utilities that haven’t been unbundled benefit since low prices typically result in more usage. The challenge will be to manage expectations that this environment will last forever. However, current price projections make customer relations easier.

P&GJ: Are there particular pieces of legislation that concern AGA?

Jibson: AGA is always tracking legislation that affects utilities. As mentioned, even though there may be no specific legislation right now, we’re closely following all discussions on tax policy, environmental initiatives and energy policy in general.

P&GJ: What challenges have LDCs faced in adjusting to the Shale Gas Revolution?

Jibson: The only real challenge has been helping our producing peers educate the public about the technology and practices that have resulted in increasing supply and lower prices. While we help educate, we need to listen to our customers’ concerns and address them as soon as possible in an open, transparent process.

P&GJ: How optimistic are you about the future of the natural gas industry?

Jibson: Our industry has a critical, short-term role in helping get the U.S. economy back on track. The promises of natural gas can help address most Americans’ immediate concerns like employment and energy security. Our product also holds the key to many of our long-term concerns related to access to reliable, affordable, environmentally friendly energy supplies. I’ve always been optimistic about our industry, and now I’m thrilled that there is growing national consensus that the future of natural gas has never been brighter.

P&GJ: Do you expect much new pipeline construction activity over the next 12 months? What factors are driving that part of the business?

Jibson: With the rebounding housing markets, we’re seeing an increase in mains and service lines. More than $5 billion will be spent on upgrades and local pipeline-replacement projects. But interstate-pipeline construction will probably be minimal. There seems to be enough transportation service, right now, for shale plays, and the Rockies is slightly overbuilt since the low-price environment has slowed production.

P&GJ: What new technologies are being developed that will help make utilities more efficient? Jibson: Almost everything we do is constantly improving. Beyond the communications and data systems that benefit most businesses, we are seeing recent, significant advances in remote metering, pipe-locating, GPS-supported mobile dispatching, more elaborate engineering and security systems.

P&GJ: How have you seen the gas industry change since you began your career, including the public’s perception of the industry?

Jibson: The biggest change has been the perception of our product. The abundance of natural gas has changed the paradigm. It is now viewed as the backbone of national energy policy. The industry itself has so many moving parts it’s more dynamic than ever. Natural gas is being used in so many new applications and has promise for many more. It is America’s foundation fuel, ideal for building an economic resurgence while supporting the development of other forms of energy. The public’s perception of the utility industry has also changed. Because of low prices and visible conservation programs, we are now viewed to be more in alignment with our customer’s interests than ever in my career.